CAIE A-Level Economics 7.5.9 Types of profit

CAIE A-Level Economics 7.5.9 Types of profit
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise identifying normal, subnormal and supernormal profit from cost-revenue diagrams, firm aims and changes in fixed costs.

How this is tested

  • use AC and AR at the chosen output to identify normal or supernormal profit
  • interpret cost-revenue diagrams when a firm switches from profit to sales revenue maximisation
  • predict how higher fixed costs affect profit while price and output remain unchanged

Question 6

[Maximum number: 1]

A firm sells 10000 units per month at a price of $ 10. The firm's total fixed cost is $ 40000 per month. The firm makes only normal profit.

What is the average variable cost for this output?

A

$ 2.00

B

$ 4.00

C

$ 6.00

D

$ 8.00